|The Korea Composite Stock Price Index tumbled below the 1,900 mark for the first time this year during Monday trading amid growing concerns of a financial crisis in emerging nations, such as Argentina. The index eventually ended at 1,910.34, down 1.56 percent from Friday. (Yonhap)|
Despite the immediate blow, Korea is not very likely to be directly affected in the long term by a currency crisis or economic downturn in Latin America unless the regional financial anxiety spreads to advanced nations, industry watchers said Monday.
“Korea’s market is highly stable, not so vulnerable to the fluctuations in the emerging countries,” said Shin Min-young, senior researcher at the LG Economic Research Institute.
“But it should keep strict watch on whether the regional instability spreads on to other countries, especially its primary trade partners.”
The benchmark Korea Composite Stock Price Index fell 1.56 percent on the day to close at 1910.34, unable to recover after a weak start.
In mid-morning, the index fell below 1,900 for the first time in five months. Market heavyweights Samsung Electronics and Hyundai Motor shed 1.07 percent and 2.19 percent, respectively, during trading.
The won-dollar exchange rate, which kicked off at 1,085.5 won per dollar in the morning, peaked at 1,087.7 won per dollar, 7.3 won weaker than the previous day. The local currency eventually closed at 1,083.6 won against the greenback.
Despite gloomy figures, local financial experts claimed that the impact of financial jitters abroad on Korea’s economy would be limited, both in scale and duration.
Optimists even predicted that the decline of the emerging economies may lead to more investment in Korea as a safer alternative.
“Korea is classified as a relatively secure place of investment among emerging states,” said Lee Dae-sang, a researcher at Daeshin Securities.
“It may be possible that foreign capital may flow back into Korea, seeking an alternative to the faltering markets.”
Financial authorities nevertheless tensed up on the possibility that the current situation may affect Korea’s key trade partners such as the United States and China.
“Korea’s (financial) situation is quite different from that of other emerging states, but we should keep close watch on the U.S. Federal Open Market Committee and China’s slowing growth trend,” FSC chairman Shin Je-yoon was quoted as saying on Monday.
Shin thus ordered officials to remain on emergency duty during the upcoming Lunar New Year holidays.
By Bae Hyun-jung (email@example.com)